Tate JA considered the contest to be a narrow one – described as follows:

…whether the inclusion of the letters ‘GST’ in the relevant box, rather than ‘plus GST’, is a sufficient indication that under the contract the risk of liability for GST lay with the purchaser. In other words, does the absence of the preceding single word ‘plus’ in the relevant box preclude the conclusion that the parties agreed to reverse the default allocation of liability for GST by employing the mechanism in general condition 13.1?

Her Honour considered that there was sufficient indication in the contract that the parties agreed to reverse the default allocation of the liability for GST. Her Honour considered the absence of the word “plus” did not preclude that conclusion. Had the parties remained content with the default allocation of liability for GST, there was no need for any words to be added to the box – the box could simply have been left blank. That blank box would have sat alongside all the other blank boxes in the particulars of sale. A reasonable business person would have understood the letters “GST” in the relevant box to mean that the parties, objectively, intended to reverse the default allocation of liability for GST to the vendor and intended to do so by employing the mechanism in general condition 13.1.

Osborn and Kaye JJA came to a similar conclusion. Their Honours were persuaded that: the inclusion of the letters “GST” in the Particulars of Sale; the parties being selective as to which spaces, in those particulars, were filled in; and the commercial context to that notation in the contract, taken together, lead to the conclusion contended for by the vendor – that the risk of liability for GST was to lie with the purchaser.

Any internal legal advice produced by officers of the Australian Taxation Office in relation to the contention by the Respondent that s 38-385 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) does not apply to the supplies of gold bullion by the Applicant because the supply of that bullion was not the first supply after its refining because the Applicant did not undertake any ‘refining’ to produce the bullion as the refining material from which the gold was produced had a purity of at least 99.5%.

The applicant sought the order pursuant to s 37(2) of the Administrative Tribunal Act whereby the Tribunal can order the decision maker (in this case the Commissioner) to lodge with the Tribunal “documents that may be relevant to the review of the decision by the Tribunal”.

The proceeding involved GST assessments and assessments of administrative penalties that were issued on the basis of recklessness by the applicant. The subject of the GST assessments was the entitlement of the applicant to claim input tax credits in respect of the acquisitions made in respect of the supply of gold bullion- whether those acquisitions were “creditable acquisitions”. Where that supply of gold bullion was GST-free under s 38-385, input tax credits would be available. However, where that supply was input taxed, s 11-15(2)(a) would block any entitlement to input tax credits. The Tribunal observed that the central issue in the substantive proceedings was directed to whether the supply of gold by the applicant was the first supply after it had been refined by the applicant.

The applicant submitted that the Tribunal should be satisfied that legal opinions prepared by internal legal advisors may be relevant to the decision under review. It was put to the Tribunal that the Commissioner had received internal written legal advice to the effect that the position adopted by the applicant was either correct or that the position adopted by the Commissioner was unlikely to be accepted by a court. The applicant contended that if, in making its statements to the Commissioner, a taxpayer adopted a position that is reasonably arguable, it cannot, a priori, have been “reckless” – In the alternative, the applicant contended that whether or not the taxpayer’s position was reasonably arguable was relevant to the consideration of whether a penalty should be remitted.

The Commissioner submitted that any legal advice obtained by him had no relevance to any “taxable fact” with which the proceedings were concerned, that a position may be reasonably arguable but still be reckless, that the request was premature, and that the advice was subject to legal professional privilege.

The Tribunal did not accept the Commissioner’s argument that the application was premature or a fishing expedition. The Tribunal concluded that such internal legal advice produced by officers of the Commissioner go to the issue of whether the applicant’s position is reasonably arguable, which is relevant to the issue of remission of penalties. Further, whether any documents produced are subject to legal professional privilege is a matter to be addressed when documents have been lodged and the question arises whether the Tribunal should direct that they provided to the applicant.

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